Home / Knowledge / News / Textiles / Cotton prices likely to trade inversely to Dollar
Cotton prices likely to trade inversely to Dollar
26
Sep '09
After briefly breaching 65 cents/lb, the December contract fell sharply over a few of days in mid-August before finding support near 58 cents/lb. In the weeks since, December futures have gradually drifted upwards, surpassing 61 cents/lb in recent trading. Movement in the A Index followed the same pattern, but was more muted, dropping from levels over 65 cents to 62 cents/lb before slowly climbing back up to levels just over 63 cents/lb. With ongoing absence of strong fundamental signals, cotton prices appear to continue to take direction from outside market forces. An apparent correlation is with equities. The link between stocks and cotton prices could be reflective of investment flows, but could also be a product of the relative value of the dollar, which has tended to trade inversely to equities - weakening when stocks rise and strengthening when stock prices fall. Such movement in the dollar, when initiated by changes in equity values, could also cause cotton prices to follow a pattern similar to that of stock prices.

While macroeconomic evidence from across the world suggests that the worst declines of the recession may be in the past, signs of growth remain scarce. As a result, with the possible exception of China, consumer demand for textile products across the world continues to be weak. The latest USDA report reflects the persistent stagnant state of the global economy with consumption estimates largely unchanged, decreasing only 17,000 bales worldwide. Among the few notable revisions was a 250,000 bale reduction for China, which was mostly offset by a 200,000 bale increase for India. The relative absence of significant changes to consumption estimates resulted in few changes to world trade figures. Estimated exports increased only 40,000 bales worldwide, with a 300,000 bale reduction to the Indian estimate more than counterbalanced by a 300,000 bale increase in export expectations from the United States and a 100,000 bale increase to the Pakistani figure.

Production estimates saw more significant revision, with the world estimate reduced 819,000 bales. The largest individual change was for Indian production, which declined 1.0 million bales despite recent projections by the Cotton Corporation of India that acreage would likely surpass the 10 million hectare mark for the first time in 2009/10. Planting encouraged by last year's increase in the guaranteed minimum price will face dry conditions that have already left India with 20.0% less water year-to-date than the long-term average and make low yields a strong possibility in 2009/10. In contrast, weather conditions have been largely favorable across the U.S. With the exception of non-irrigated acres in southeastern Texas, which have been hit with severe drought, the U.S. cotton crop is generally reported to be in good condition and the U.S. production forecast was raised 231,000 bales. Harvesting has begun in some areas of China and production expectations remain unchanged from previous months. Due to lower acreage, the forecast for the current Chinese crop is at a level 6.4% lower than in 2008/09 (33.8 million bales in 2009/10 compared to 35.8 million bales in 2008/09).

Must ReadView All

Textiles | On 28th Mar 2017

India may impose duty on elastomeric filament yarn

The Government of India is likely to impose anti-dumping duty on...

Courtesy: Lee Cooper

Apparel/Garments | On 28th Mar 2017

CCI clears FLFL proposal to divest Lee Cooper

The Competition Commission (CCI) of India has approved the proposal...

Textiles | On 28th Mar 2017

Bardoli CEFC to benefit south Gujarat MSMEs

India’s first common engineering facility centre (CEFC) at Bardoli,...

Interviews View All

Kaizad Hansotia
GetNatty

Competition is the best thing that can happen to a startup

Manfred Mentges
Sedo Treepoint GmbH

We see a higher demand in colour management systems, as customers see big...

Riddhika Shah
SS Homme

'Worsted wool is the ideal fabric for menswear'

Marten Alkhagen
Swerea IVF AB

Marten Alkhagen, Senior Scientist - Nonwoven and Technical Textiles of...

Larry L Kinn
Suominen Corporation

Larry L Kinn, Senior Vice President - Operations Americas of Suominen...

Urs Stalder
Sanitized AG

Urs Stalder, CEO, Sanitized AG, talks about the increasing use of hygiene...

Jay Ramrakhiani
Occasions Elegance Wear

It is believed that by early 19th century, Varanasi weavers had moved away ...

Mike Hoffman
Gildan Activewear SRL

Gildan Activewear, a manufacturer and marketer of branded clothing and...

Rupa Sood and Sharan Apparao
Nayaab

Nayaab, an exhibition meant to celebrate Indian weaves, is in its second...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH
March 2017

March 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

SUBSCRIBE


Browse Our Archives

GO


eNEWS
Insights
Subscribe today and get the latest News update in your mail box.
Advanced Search